Tag Archives: lending companies
How to Spot Bad Credit Personal Loan Scams
Getting approved for a personal loan can be difficult if you have history of bad credit. However, consumers who suffer from bad credit can search for lending companies that extend personal loans even for those who are credit challenged.
Nevertheless, there is the risk of dealing with the wrong kind of lender. Consumers need to be aware that bad credit personal loan scams do exist in the market and the only way they can be avoided is by being aware of their tactics. Listed below are warning signs that you need to look out for when evaluating lending companies:
Guarantees your approval. Scammers can promise guaranteed approval to attract customers. Although there are lending companies that extend bad credit loans, the applicantÂ’s credit history will always be considered before the loan is granted. In fact, the interest rate you will be given will depend on your personal credit score. Therefore, watch out for lenders that promise to grant you a loan without conducting credit check.
1-900 Customer Service number. Avoid loan providers that make use of the 1-900 telephone number to get in touch with customers. Remember that calling the 1-900 number is not free, so the caller will be charged for the call. A legitimate lending company must have its own independent landline number as it is a basic requirement for businesses.
Requires you to provide your personal information in exchange for a free quote. Consumers can compare loans by requesting for free loan quotes over the internet. However, make sure that you are not being asked to enter your personal information in exchange for the free quotation. NEVER give out your Social Security Number, Bank Account, Credit Card Numbers, full name, or residential address in exchange for quotes.
Sends unsolicited loan offers. Do not reply to bad credit loan offers that you may receive through your email or post mail. Do not even click on the links that are included in the email. Legitimate loan companies do not send unsolicited offers nor do they use deceitful marketing tactics.
The loan is offered via telephone. The Federal Law prohibits lending companies from offering bad credit loans through telephone. In case you receive a call from a so-called “bad credit loan” agent who may be asking for your personal information or encouraging you to sign up for a loan with their company, end the call right away and do not provide any details.
A loan company without a physical address. A legitimate business needs to have a physical office where it conducts its main operations. It is one of the basic requirements when seeking a business license. Therefore, avoid bad credit loan offers from lenders that only perform operations over the internet.
Creating a website is easy and scammers can make it look professional to attract borrowers. To be sure, check the office address of the lending company that is listed on the website and verify if the office does exists. As much as possible, personally visit the office and meet with the representative to find out more information about the loan offered.
Is Private Lending for You?
If you do not have outrageously generous, rich relatives, you might think that, when it comes time to get a loan to buy or renovate a home, that your bank and credit union are your sole sources of major capital. However, the Internet has revolutionized the way we do business and, now, how we can get loans. While it has been accused of separating people from person-to-person interaction, the Internet has actually started to bring people back together in business.
Prosper.com is currently the United States’ largest person-to-person (P2P) lending company on the Internet. It functions as sort of a loan E-bay, allowing people to bid on loans they wish to invest in, and buyers to get whatever amount of money they want, for the price they are willing to pay. Prosper allows people to invest as little as $50 per loan they wish to finance. This enables people to spread their money around a wide area, providing for a wider variety of investment.
One of the most unique and compelling aspects of the private lending scene is the ability for borrowers to tell their story. The lending company has no way of knowing whether someone’s request for $10,000 to pay off their sick kid’s medical bills is true. You might be helping sent Little Johnny off to college or remodel the bathroom; then again, you may just be funding someone’s drug habit.
Private lending companies have tried to make fraud a minimal part of the private lending experience. All borrowers and lenders go through a full credit check and the lending company will send the account to collections for borrowers who default. This may not mean that you will get a return on your investment; some people will sail off with money, never to be seen again, only to return to lending companies with another sob story.
If a P2P lending company collects the funds that you invested, you still may not see a return. The costs of collection agencies can easily take 50% of the debt that the borrower owes you, even if they manage to collect. This issue is starting to be addressed with lending companies, like Zopa.com, are offering investor insurance. They will cover up to $100,000 in investor funds.
For borrowers, private lending can be an excellent way of gaining funds for projects, school, or expenses. In return for lower rates than most credit cards, people can gain thousands of dollars for whatever purpose they want it for. Most P2P sites don’t encourage people with a bad FICO score to apply for a loan until they’ve improved their score.
Many people with less-than-stellar credit can take advantage of the opportunities of P2P lending with less problems than many have at conventional institutions. One thing that helps is the ability to tell a story – whether it’s to explain that you need to build an extra bedroom for your ailing mother or to pay debts left over from a hospital stay.
P2P lending is a newcomer on the scene, owing its inception to the Internet. It has brought back lending as a personal experience, as lenders can choose borrowers based on their credit score… or based on their stories. If you are a borrower, looking for a way to escape outrageously high credit card interest, you might try looking at one of these companies.